The Department of Labor (DOL) recently issued electronic disclosure rules for retirement plans. The rules now allow the use of electronic disclosure as a default method of disclosure if certain conditions are met. In the past, paper notices and statements were required to be the default disclosure method. The new rule can be used for plan participants who have provided an electronic address such as an email or smartphone number. It applies to any document of information required to be disclosed under ERISA.
The process of electronic delivery begins by providing all participants with a paper notice that gives information about the new electronic delivery method, the electronic address that will be used and the right to opt out. If the notices and statements are provided via email, the email must contain a brief description of the document, the right to receive a free paper version, the right to opt out of electronic delivery, and the phone number of a person to contact for more information.
Required documents can also be posted to a website that is available to plan participants. This requires sending a Notice of Internet Availability (NOIA) that gives a description of the document, where it can be found on the website, the right to receive a free paper version, the right to opt out of electronic delivery and the phone number of a person to contact for more information.
Documents that can be delivered electronically include annual notices such Summary Plan Descriptions, Summary of Material Modifications, Summary Annual Reports, blackout notices, QDRO (Qualified Domestic Relations Orders), participant statements and information about plan loans. Measures must be taken to ensure that the electronic disclosures are actually received by the participant. It should be noted that the IRS has its own rules for electronic delivery that cover such notices as safe harbor notices and distribution paperwork rollover notices.
If you’re interested in electronic disclosure, please let us know!